Keeping track of data can be challenging for any business. When poorly managed, this can mean redundant, conflicting, inaccurate information and ultimately, costly mistakes that damage company reputation.
Master data management (MDM) enables organisations to manage their critical data effectively, efficiently and securely across an entire enterprise. This is achieved by creating and maintaining a single master record for customers, locations, employees and other factors related to the business.
This article will provide everything you need to know about master data management and highlight its importance in ensuring consistent, reliable and accurate data while eliminating errors.
What are the key features of master data management?
Effective data management is critical to successful business operations. MDM provides organisations with a ‘golden record’ of all their key data for sharing across teams and departments to streamline and improve reporting, decision-making and other essential processes.
When it comes to MDM, different businesses rely on different types of master data according to their needs. But you’ll also find a range of similarities including:
1. Full data integration
Master data management enables businesses to onboard data from a range of systems into a single source of truth. Not only does this minimise risk and inconsistencies, but it also improves accuracy and avoids potential mistakes.
2. Improved data quality
MDM delivers the highest level of accuracy and consistency across an organisation’s data for improved decision-making. This also allows for smoother processes, fewer errors and less time spent on rectifying mistakes.
3. Robust data security
Data security is an important part of any MDM plan. This often includes robust safety measures such as multi-factor authentication, encryption and restricted access to all sensitive information.
4. Full data compliance
Having a solid MDM system helps businesses create strong data governance policies and stay fully compliant with industry regulations. This ensures companies comply with privacy, security and data protection standards such as GDPR.
5. Greater data accuracy
Many MDM solutions include safeguards and processes for validating data before it can be used. Not only that, but it can also introduce quality checks to ensure all data is accurate.
6. Avoids data duplication
Data often comes from multiple sources and goes through many sets of hands and departments. This can dilute the quality of the data and lead to bad decision-making. MDM eliminates duplication, conflicting information and out-of-date data while continuously monitoring the integrity of these data sources.
What are the different types of master data?
Master data refers to the most complex and valuable data belonging to an organisation. It usually involves the most mission-critical data that fuels business operations and covers:
- People including employees, customers, suppliers and more
- Locations such as offices, business settings and other places
- Company assets, products, services and ‘things’ within the business
Master data comes in many forms, but some common examples include:
Customer master data
This refers to the core data needed to support customer relationships and transactions. Customer master data includes everything from names, contact information, addresses, phone numbers, purchase history and preferred payment terms. In some cases, this also includes data for employees, suppliers and healthcare patients. Master data management ensures all customer data is ‘clean,’ and presented in a single accurate view across company systems, typically via enterprise resource planning (ERP) software and customer relationship management (CRM) tools. This allows businesses to deliver better experiences for their customers, develop personalised marketing campaigns and retain full confidence in the data they hold.
Supplier master data
This covers everything from data for contracts, policies, pricing and vendor accounts to the supplier’s name and preferences. Supplier master data plays a key role in any procurement and purchasing process, helping businesses plan and budget for the future. Not only that, but this kind of master data gives organisations a clear picture of a supplier’s performance, pricing preferences and overall spend to support accurate forecasting.
Product master data
A product’s description, item number, unit price and features are all examples of product master data. The data must be reliable and accurate for sharing across multiple teams to support effective sales and marketing strategies and monitor product development timelines.
Company asset master data
This refers to trademarks, equipment and any other physical or intangible assets belonging to a business. Asset master data also often includes leasing and purchasing information, asset values, depreciation rates and more. Accurate asset master data helps businesses predict outcomes and budget for future expenditures like essential equipment maintenance.
Location master data
The address of a physical company location is an example of master data. This could include everything from corporate offices and warehouses, to distribution centres and high-street stores. This information can be extremely useful when making business decisions based on location such as ensuring a store is stocked with the right products for that area.
Reference master data
This includes standard international codes for countries, regions, states and more. Reference master data refers to stable datasets that also include currencies, order status entries and other generic values, offering uniformity, accuracy and reliability.
Why is master data management important?
Master data management is important because it ensures consistent, accurate and reliable data across all business departments, driving better decision-making, improved efficiency and full compliance with regulations.
Data comes from multiple sources and is touched or processed by many people across numerous company departments. If not properly managed, this can result in conflicting or even redundant information that is of little use. Worse still, it can harm business operations and profit margins and damage reputation.
As companies grow, develop and become more complex, adopting processes and tools that manage and protect all mission-critical data takes on greater importance. Not only will effective master data management ensure consistency and security around key data, but it will also drive operational efficiency and reduce risk.
What are the benefits of master data management?
Master data management offers numerous benefits to businesses from all kinds of industries. If your organisation is looking to improve the quality of its data, eliminate errors and reduce downtime, master data management is a highly effective solution that can drive better business outcomes.
Some of the main benefits of MDM include:
- Greater efficiencies: critical data is ‘clean’, optimised, up-to-date and stored securely in one shared location, eliminating the need for information silos while enhancing collaboration and communication.
- Data confidence: with silos reduced, all key data can be centrally managed, maintained and safely shared between departments, reducing the risk of errors.
- Fewer resources: with MDM, data processes are streamlined and automated, saving businesses time and resources that can be redirected to explore avenues for business growth.
- Better value: with all data combined into one source of truth, business can gain deep insights and uncover trends and preferences that achieve better personalised customer experiences.
As your business grows, more people will need access to your mission-critical data. Master data management gives you a single point of reference for this essential information. However, there are other forms of data that need to be cleaned, managed, organised and shared. That’s why businesses who invest in reliable data management tools and solutions can look forward to greater visibility, security, reliability and scalability as they expand. Effective data management is a key process for achieving better outcomes through data-driven decision-making, no matter what industry you work in.
Need help with your master data management?
At Valcon, we provide all the tools, knowledge, and support you require to make your data-driven organisation a success. From master data management to full data governance, we’re here for all your data management needs. Contact us today.
